Vijay Shanthi Finance

We have audited the attached Balance Sheet of VIJAY SHANTHI FINANCE
 LIMITED, Chennai as at 31st March 2003 and the Profit & Loss account of
 the Company for the year ended on that date annexed thereto. These
 financial statements are the responsibility of the Companys
 management. Our responsibility is to express an opinion on these
 financial statements based on our audit. We report that we conducted
 our audit in accordance with auditing standards generally accepted in
 India. Those standards require that we plan and perform the audit to
 obtain reasonable assurance whether the financial statements are free
 of material misstatements. An audit includes examining on a test basis,
 evidence supporting the amounts and disclosures in the financial
 statements. An audit also includes assessing the accounting principles
 used and significant estimates made by management, as well as
 evaluating the over all financial statements. We believe that our audit
 provides a reasonable basis for our opinion.
 
 1. As required by the manufacturing and other Companies (Auditors
 report) order, 1988 issued by the Company Law Board in terms of section
 227 (4A) of the Companies Act 1956, and on the basis of such checks as
 we considered appropriate, we enclose in the annexure a statement on
 the matter specified in paragaraph 4 and 5 of the said order.
 
 2. Further to our comments in the annexure referred to in paragraph 1
 above :-
 
 a) We have obtained all the information and explanations, which to the
 best of our knowledge and belief were necessary for the purpose of our
 audit.
 
 b) In our opinion Proper books of account as required by law have been
 kept by the Company so far as appears from our examination of such
 books.
 
 c) The Balance Sheet and Profit and loss account referred to in this
 report are in agreement with the books of accounts.
 
 d) In our opinion, the Balance Sheet & Profit and Loss account comply
 with the Accounting Standards as referred to in Sec 211 (30 of the
 Companies Act, 1956, except accounting standard 13 relating to
 investments as reported in point no.B of Notes to Accounts.
 
 e) Based on the written representation from the Directors and as
 recorded by the Board of Directors, none of the Directors are
 disqualified as on 31-March 2003 from being ap pointed as Director
 under section 274(1)(g) of Companies Act, 1956.
 
 D In our opinion and to the best of our information and according to
 the explanations given to us, the said accounts give the information
 required by the Companies Act, 1956, in the manner so required and give
 a true and fair view
 
 i) Subject to our observation and comments on the Notes on Accounts in
 Clauses B and H regarding provisions required for investments, loans
 and advances and sundry debtors.
 
 ii) In so far, as it relates to Balance Sheet of the state of affairs
 of the Company as at 31st March 2003 And
 
 iii) In so far, as it relates to the Profit & Loss account, the loss of
 the Company for the year ended on that date.
 
 Place: Chennai                                  for V.Ramaratnam & Co.,
 Date: 30.6.2003                                   Chartered Accountants
                                                                R.Sundar
                                                                 Partner
 
 ANNEXURE REFERRED TO IN PARAGRAPH 1 OF THE REPORT OF EVEN DATE OF THE
 AUDITORS TO THE MEMBERS OF VIJAY SHANTHI FINANCE LIMITED ON THE
 ACCOUNTS FOR THE YEAR ENDED MARCH 31. 2003.
 
 1) The Company has granted unsecured loans to firms and companies and
 parties listed in the register maintained u/s 301 of the Companies Act,
 1956. The terms interest and other conditions are prima fade
 prejudicial to the interest of the company but during the year the
 Company has not given any fresh loans.
 
 2) The parties to whom the loans and advances in the nature of loans
 are given, the parties are neither repaying the principal nor interest
 and the Company has not taken any steps for recovery, except loans to
 employees.
 
 3) As explained to us, the stock of stores, spare parts, raw materials,
 work in progress and construction materials was physically verified by
 the management at regular intervals during the year and in our opinion
 the frequency of verification was reasonable with regard to the size of
 the Company and the nature of its business,,
 
 4) In our opinion and according to the information and explanations
 given to us, the transactions of purchase of goods and materials and
 sale of goods, materials and services for the value aggregating to
 Rs.50,000/- or more in respect parties entered in the register
 maintained u/s 301 of the Companies Act, 1956, have been made at prices
 which are reasonable having regard to prevailing market prices for such
 goods or at the prices at which transactions for similar goods have
 been made with other parties. But there is no separate contract or
 arrangement entered into by the company with these parties.
 
 5) The Company has not accepted deposits from the public as defined
 under Section 58A of the Companies Act, 1956 or rules made thereunder.
 
 6) The Company has not been registered as NBFC with the Reserve Bank of
 India.
 
 7) In our opinion, the Company has an adequate internal audit system
 commensurate with the size and nature of business.
 
 8) According to the information and explanation given to us, there are
 no material undis puted amounts payable in respect of income tax,
 wealth tax, sates tax, customs duty and excise duty which are
 outstanding as on 31.3.2003 for a period of more than six months from
 the date they became payable.
 
 9) According to information and explanations given to us no personal
 expenses of the employees or Directors have been charged off to the
 revenue account other than those payable under contractual obligations
 and in accordance with the generally accepted business practice.
 
 10) We have reported only on those points of the said order as are
 applicable to the com pany keeping in view the activities of the
 company.